Monthly Archives: September 2009

Phenomenal Investment Opportunities

It is my belief that there will be many phenomenal investment opportunities arising in the near and intermediate future.   Many more than during an  average time period.

However, I am also of the belief that they will be harder to “realize” for a variety of reasons.  Of course, the main prerequisite is having sufficient funds available at the optimal time in order to make such investments. 

I define “phenomenal investments” as those that multiply, often many times, in value relative to their holding (time) periods.  Those investments that can provide such returns over short periods are, of course, preferable, but usually demand even greater skill. 

Phenomenal investments are elusive for many reasons.

 

SPX at 1049.26 as this post is written

The Changing Investment Climate

Here is a link to an interesting White Paper from Guy Haselmann of Gregoire Capital, dated August 2009:

http://www.gregoirecapital.com/HF%20Outlook%208-09.pdf

I found it interesting because it discusses a variety of very important concepts such as investment flexibility, market dislocations, inflation vs. deflation, diversification, hedge fund operating risk, etc.

 

SPX at 1063.22 as this post is written

The “Buy and Hold” Philosophy

Here is a story from CNBC.com on September 23: “Buy-and-Hold Investing Makes A Return After Turbulent Year”

http://www.cnbc.com/id/32970487

I am not a fan of the “Buy and Hold” philosophy, although I will concede that it worked (very) well, generally speaking, during the 20th Century.

As far as the present and future is concerned, I wrote an article titled “Does Warren Buffett’s Market Metric Still Apply?” that discusses various factors that are highly relevant to the “Buy and Hold” investment strategy. 

For those who haven’t read it, that article can be found in the “ProsperityByPen.com Directory”, at the right hand side of the page under the “Pages” heading as well as at this link:

https://www.economicgreenfield.com/prosperitybypencom-directory/

SPX at 1044.38 as this post is written

 

Gold Below $1000

With Gold now below $1000, I would like to call attention to a post of September 4 titled “Gold and Implications.”  Here is the link:

https://www.economicgreenfield.com/2009/09/04/gold-and-implications/

I think that Gold below $1000, after having failed to hold above this level, is very significant.

Also significant is the number of people who have been predicting a Gold price considerably higher than $1000, many saying Gold will reach $2000 to $5000/oz.

I like Gold’s properties.  However, I don’t believe that the economic factors now in existence support a strong Gold price, from an “all things considered” basis.

Gold’s price is particularly hard to predict, because there is always a “fear factor premium” that may assert itself.  While this “fear factor premium” seems to have diminished over the last couple of decades, it can always reassert itself in times of panic.  However, I think it was very significant that during the Financial Crisis of the second half of 2008 (especially July – October), Gold faired poorly, which in my mind does not bode well for Gold’s “fear factor premium” at least in the near term. 

SPX at 1050.78 as this post is written

misc. note

Just a couple of quick notes:

First, as many already know,  I occasionally write blog post “series” that span over a few blog posts.  Usually these blog series concern topics that I feel very strongly about, and/or are sufficiently complex to require more than one post.  I have created a “blog post” page that indicates the starting links for these blog series.  This page can be found along the right side of the home page, under “Pages”, as well as at this link:

https://www.economicgreenfield.com/blog-series/

Also, just a reminder that I keep a secondary posting site for this blog at the following address, should there ever be an issue in accessing this site.  Also, searching for keywords at this alternate site is easy.  The link for this secondary blog site is:

http://economicgreenfield.blogspot.com/

An Interesting Poll…

Here is a September 17 story detailing a Bloomberg News poll:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDhCOltOR1RY

I found various aspects of this story to be interesting, but one facet really stood out:

“Respondents were divided over whether the economy will get better or stay the same in the next six months; only 1 in 6 said things will get worse.”

1 in 6 seems very low to me on an “all things considered” basis, especially with the unemployment situation.

SPX at 1056.36 as this post is written

The “Paycheck To Paycheck” Dynamic

Lately there have been a couple of polls conducted showing the percent of people living “paycheck to paycheck.”  Here is a CNBC.com story from September 16 regarding this issue:

http://www.cnbc.com/id/32862851

This “paycheck to paycheck” dynamic is noteworthy, especially since it appears to be widespread.  It appears to be relatively common even among those making above $100,000. 

It would be very interesting to have a better, and broader, understanding of this “paycheck to paycheck” issue.  I’m sure it is an important driver in today’s economic situation.

SPX at 1071.66 as this post is written 

“The Greater The Economic Weakness, The Stronger The Recovery”

Recently there has been a thought circulating that the worse the recession (or economic weakness) the stronger the following economic rebound.  This refrain has been heard from various quarters.

This belief does appear to be historically accurate, at least to some degree.  

However, there are three aspects of this belief that I want to elaborate upon.  The first is that even if one believes “the deeper the recession, the stronger the recovery” theory, there is a question of timing.  If the period of economic weakness is long, mistaking the timing and making investments or other financial commitments too early in the cycle, before the recovery has begun, can be a costly and painful mistake.

Second, even if one has complete faith in this belief, this has to be viewed as a historical fact.  Is this time “different?”  It certainly appears to be, as I have extensively commented upon.  Perhaps the operative phrase should be “Past performance is no guarantee of future results.”   

Third, this belief seems related to one that I commented on in a June 5 blog post – with the same implications.  Here is that blog post:

https://www.economicgreenfield.com/2009/06/05/ben-bernanke-quote/

SPX at 1061.05 as this post is written

A Notable Quote From Ron Paul

On Wednesday The Wall Street Journal ran a story titled “Anti-Fed Activists Fuel Push for Audit”:

http://online.wsj.com/article/SB125305951231914071.html

One quote from Ron Paul really caught my attention:

“The Fed will self-destruct,” Mr. Paul said in an interview. “This economy is going to get worse and this dollar is going to get a lot worse.”

I found “The Fed will self-destruct” phrase to be most interesting.  I’m not sure what he means by this – perhaps he elaborates on this in his book “End the Fed” – but I think the phrase is worthy of contemplation.  Its connotations are massive, should Ron Paul prove correct…

SPX at 1066.04 as this post is written